The Daily Caller

The Daily Caller
U.S. President Barack Obama (R), Director of the Office of Management and Budget Sylvia Mathews Burwell and outgoing U.S. Secretary of Health and Human Services Kathleen Sebelius (C) walk after Obama announced Burwell as his nominee to replace Sebelius, at the Rose Garden of the White House in Washington, April 11, 2014. REUTERS/Larry Downing  (UNITED STATES - Tags: POLITICS HEALTH) - RTR3KWJU U.S. President Barack Obama (R), Director of the Office of Management and Budget Sylvia Mathews Burwell and outgoing U.S. Secretary of Health and Human Services Kathleen Sebelius (C) walk after Obama announced Burwell as his nominee to replace Sebelius, at the Rose Garden of the White House in Washington, April 11, 2014. REUTERS/Larry Downing (UNITED STATES - Tags: POLITICS HEALTH) - RTR3KWJU  

Report: Obamacare Subsidies Likely To Cost Billions More Than Expected

EDITOR’S NOTE: This article cites an LA Times analysis that estimated that a higher rate of subsidy payments would increase the total 2014 cost of payments to $16.5 billion. The LA Times has since retracted their analysis, and now believes the cost of subsidies will be close to the original Congressional Budget Office’s estimate of $10 billion. 

Obamacare subsidies are likely to cost billions more than expected this year, after a Wednesday federal report revealed that a 87 percent of HealthCare.gov customers are getting taxpayer subsidies to purchase health insurance.

According to a report released by the Department of Health and Human Services Wednesday, customers in federally-run Obamacare exchanges that received any amount of subsidies paid on average 76 percent less than the real cost of their premium.

While the average premium cost $346 per month for subsidized HealthCare.gov users, taxpayers are paying insurers an average of $246 per month, while Obamacare customers are chipping in an average of just $82 per month.

“Nearly 7 in 10 consumers who signed up for Marketplace coverage are paying $100 or less for that coverage,” said newly confirmed HHS secretary Sylvia Burwell. “When there is choice and competition, everybody benefits,” she concluded oddly, not mentioning that the sole factor in lowering the cost for Obamacare customers is upping the taxpayer tab.

“The report does not demonstrate that families had more choices or that premiums are lower in the past,” said Douglas Holtz-Eakin, president of Washington think tank the American Action Forum and a former CBO director. “It does demonstrate that consumers avoid 76 percent of premiums because federal spending subsidizes the cost.”

The high proportion of customers seeking the advanced premium tax credits to fund their health insurance program will boost the cost of subsidies by 65 percent, according to an analysis of the HHS data by the Los Angeles Times.

According to the data from federally-run Obamacare exchanges alone, subsidies will cost $11 billion — and if state-run exchange customers qualify for subsidies at the same rate, Obamacare subsidies will total $16.5 billion for 2014 alone. The Congressional Budget Office last projected that subsidies would cost $10 billion in 2014.

While Obamacare customers are relying on significant taxpayer help, they’re not choosing the least costly plans. Almost all sign-ups who chose a second-tier silver plan qualified for tax credits, while just 73 percent of those who chose the lowest-premium bronze plan were eligible for the credits. It’s not entirely unsurprising: only those who choose silver plans are eligible for additional cost-sharing for out-of-pocket expenses, as well as premiums. (RELATED: Report: In Colorado, Taxpayer-Subsidized Obamacare Customers Opting For Pricier Plans)

HHS did not provide information of its own on the total cost of the subsidies, instead referring reporters on a Tuesday conference call to the CBO; the department also provided no updated information on the number of Obamacare customers who have actually paid their premiums or how many have continued to do so.

But the report is based on the subsidies the Obama administration is currently doling out to Obamacare customers — millions of which have recently been called into question. Over two million customers’ applications have income-related discrepancies which could change the amount of their tax credit.

The New York Times reported Monday that the administration is notifying hundreds of thousands of customers that their income information is incorrect and they may lose their coverage entirely or be forced to repay their subsidy next tax season if the discrepancies aren’t addressed.

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EDITOR’S NOTE: This article cites an LA Times analysis that estimated that a higher rate of subsidy payments would increase the total 2014 cost of payments to $16.5 billion. The LA Times has since retracted their analysis, and now believes the cost of subsidies will be close to the original Congressional Budget Office’s estimate of $10 billion.